Forex News:USD declined vs EUR after sudden drop in U.S. stock markets spooked currency investors and convinced them to take profits from last week's rise in the greenback; Dow turned negative as financial firms' shares began selling off on worries over the ongoing credit crisis. That dampened overall investor sentiment in the U.S., pushing EUR to an intra-day high of 1.5754. Falling oil prices helped the dollar recover some ground late in the session. Late in New York, EUR/USD was at 1.5720 vs 1.5697 late Friday. USD/JPY was at 107.17 from 106.72, while EUR/JPY was at 168.47 vs 167.50. GBP/USD was at 1.9773 vs 1.9827, and USD/CHF at 1.0261 vs 1.0247.
Treasurys rallied as a heavy wave of selling in the mortgage market unnerved financial markets and pressured stocks; 2-year yield down 6.5 bps to 2.46%, 10-year yield down 4.6 bps to 3.93%. Stocks ended down after a volatile session as traders tried balance a drop in oil and renewed hopes for a Yahoo deal against fears over lenders; Fannie Mae fell 16% and Freddie Mac shed 18% as a note from Lehman saw investors worry the lenders would have to raise capital because of higher loss reserve requirements under new rules. Dow fell 0.5%, Nasdaq eased 0.1%, Philly Semicons +0.6%. Crude oil futures took a dive, pushed by early strength in USD, and caught in a volatile swing downward; Nymex August crude settled $3.92 or 2.7% lower at $141.37/bbl. Lower oil prices and USD strength for much of session pressured precious metals but gold pared losses heading into close as dollar slipped; August Comex gold fell $4.80 to $928.80/oz.
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